Buying at auction

Mr_Moo_2

UserWG47 wrote: »

Can anyone answer my question about inflation adjusted or not long leases in my first post? Will it still be £35 per year at the end of the lease in 900years time? Assuming the Pound sterling is still in use? Assuming the Human race is still the dominant form of life on Earth in 900 years?

I would expect it depends on what it says in the lease. If there is no increase then it gradually will become an irrelevant figure.

cattie

If the lease states Ground Rent at £35 per yr with no mention of increases at other intervals, then the ground rent will remain the same for the rest of the lease term.

UserWG47

Mr_Moo wrote: »

I would expect it depends on what it says in the lease. If there is no increase then it gradually will become an irrelevant figure.

Seems too good to be true. Surely this is a mistake? No point having a lease in that case. I want to get to the bottom of this.

UserWG47

cattie wrote: »

If the lease states Ground Rent at £35 per yr with no mention of increases at other intervals, then the ground rent will remain the same for the rest of the lease term.

And the amount to buy it? Will that remain the same for 900years? But they do not have to accept is that right?

lincroft1710

If the plot is in a nice area, I would expect the guide price would easily be exceeded. Single building plots are keenly sought after and most go for above the guide price.

Errata

UserWG47 wrote: »

Seems too good to be true. Surely this is a mistake? No point having a lease in that case. I want to get to the bottom of this.

From a previous MSE thread -

Long leasehold houses are often accidents of history. In our area a lot of cottages were build by Mill/Mine/Factory owners in 1800's or later for workers and most of those are 999yr leaseholds with a long lost freeholder and a peppercorn rent that's never been collected in living memory. Their value is no different to a similar freehold property.

tim123456789

UserWG47 wrote: »

Seems too good to be true. Surely this is a mistake? No point having a lease in that case. I want to get to the bottom of this.

No mistake

and the point of having the lease is it lets the freeholder tell you what you can/can't do with the property (in archaic leases, even to the point of how you should decorate)

tim

quotememiserable

UserWG47 wrote: »

Seems too good to be true. Surely this is a mistake? No point having a lease in that case. I want to get to the bottom of this.

Another thing to realise is that 100 years ago when the value was set, inflation didn't exist, so no-one was putting in inflation clauses. Now they just have to live with the consequences of that.

quotememiserable

UserWG47 wrote: »

I read its about £190,000 to buy out the lease.

Where did you read that? The value of £35 receivable annually is about £1400 even at todays tiny interest rates. This is because you could pop £1400 in the bank and use the interest to pay £35 per year for ever, because of there being no inflationary rises. So in practice it would be pointless to pay any more than this for the freehold.